The index is digesting a rally atop major resistance (6,903) an area also illustrated below. Here again, Monday’s close (6,906) registered slightly above the inflection point.

Combined, the Nasdaq and S&P 500 have established near-term flag patterns — tight four-session ranges — underpinned by major support. As always, the bull flag is a continuation pattern, improving the chances of upside follow-through.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has reclaimed its breakdown point, an area matching the 2017 close (6,903) and the November closing low (6,908).

To reiterate, additional overhead matches the 2017 peak (7,004) and the 50-day moving average, currently 6,996. The Nasdaq has not closed atop the 50-day moving average since Oct. 3.

Tuesday’s early session high (7,005) has matched resistance, and the retest remains underway.

Looking elsewhere, the Dow Jones Industrial Average has reached its first notable resistance.

Recall that the breakdown point (23,997) closely matches last week’s close (23,996) and the retest remains underway.

On further strength, additional overhead matches the November low — the 24,268-to-24,286 area — and is followed by the 50-day moving average, currently 24,385.

Similarly, the S&P 500 is pressing its first significant resistance.

The specific area matches the February closing low (2,581.00) and the April closing low (2,581.88).

Notably, the 2,581 mark also precisely defines a 10% rally from the Dec. 26 low (2,346.58). (Start with the December low: 2,346.58 * 1.10 = 2,581.24.)

The bigger picture

As detailed above, the U.S. benchmarks’ January rally attempt is intact.

On a headline basis, the S&P 500 and Nasdaq Composite have sustained modest breaks atop major resistance — S&P 2,581 and Nasdaq 6,903.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Drilling down further, the United States Oil Fund
USO, -0.42%
has started 2019 with a rally attempt. The fund tracks the price of West Texas Intermediate (WTI) light, sweet crude oil.

As illustrated, the shares have cleared trendline resistance, also rising atop the breakdown point (10.50).

Still, the 50-day moving average, currently 11.08, has thus far capped the rally attempt, and is followed by resistance (11.37) matching the range top. An eventual close atop this area would mark a “higher high” raising the flag to an intermediate-term trend shift.

Underlying the upturn, the USO’s relative strength index (not illustrated) has recently registered three-month highs, improving the chances of upside follow-through. A breakout attempt is in play barring a violation of first support (10.50).

Key global technical tests remain in play

To start, the iShares Europe ETF
IEV, -0.47%
has rallied to retest the breakdown point.

Resistance spans from 40.55 to 40.80, an area matching the 50-day moving average, currently 40.60.

Still, the January upturn has been fueled by decreased volume, raising a question as to the rally’s sustainability and follow-through. On further strength, major resistance matches the former range top (42.00).

Well-defined resistance matches the breakdown point (53.46) and the 50-day moving average, currently 53.37. (Also see the October closing low (53.47), the November closing low (53.46) and the December gap (53.47) detailed last week.)

Here again, the prevailing upturn has been punctuated by decreased volume, reducing the chances of follow-through. Still, an eventual rally atop trendline resistance would raise the flag to a trend shift

On further strength, gap resistance (55.34) is followed by the December peak (56.22).

Finally, the iShares China Large-Cap ETF
FXI, -0.23%
remains comparably stronger than Europe, Japan and even the U.S., as measured by the SPDR Trust S&P 500.

As illustrated, the shares have narrowly maintained major support (37.85). This is the lone region detailed to maintain a posture atop the October low.

Separately, the shares have reclaimed the breakdown point (39.60), once again placing the 50-day moving average, currently 40.45, under siege. On further strength, trendline resistance (41.70) has effectively capped the shares since June.

To be sure, the prevailing backdrop does not scream “raging bull,” though China’s recent relative strength is intact.

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Still well positioned

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

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